PA-12 Computing Cash Flows from Operating Activities (indirect method)

PA12-2 (Algo) Computing Cash Flows from Operating Activities (Indirect Method) [LO 12-2] The income statement and selected balance sheet information for Direct Products Company for the year ended December 31 are presented below. Income Statement Sales Revenue $ 58,600 Expenses Cost of Goods Sold 26,000 3,000 Depreciation Expense 10,000 Salaries and Wages Expense Rent Expense 5,500 Insurance Expense 2,400 Interest Expense 2,300 Utilities Expense 1,900 Net Income $ 7,500 Selected Balance Sheet Accounts Ending Balances Accounts Receivable. $ 585 Inventory 890 445 Accounts Payable Prepaid Rent 35 25 Prepaid Insurance 30 38 Salaries and Wages Payable 80 50 Utilities Payable 30 20 Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) DIRECT PRODUCTS COMPANY Statement of Cash Flows (Partial) For the Year Ended December 31 Cash Flows from Operating Activities: Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Changes in Current Assets and Current Liabilities $ Beginning Balances $ 630 720 510